1st Jun 2005 06:00
Embargoed until 0700 hours, Wednesday 1st June 2005STOCK EXCHANGE ANNOUNCEMENTLIONTRUST ASSET MANAGEMENT PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST MARCH 2005 Liontrust Asset Management PLC ("Liontrust" or "the Group"), the independentspecialist UK equities fund management group, today announces its preliminaryresults for the year ended 31st March 2005.Highlights are as follows:- 20% growth in profit before tax to ‚£10.95 million.- 19% growth in core operating profit to ‚£10.1 million.- Core earnings per share, at 23.64 pence, up 4% on last year.- 43% increase in total proposed core dividend for the year. 8.75 penceper share core final dividend (core total for the year 10.75 pence comparedwith 7.5 pence the previous year).- Average funds under management over the year up 23% at ‚£5.023 billion.Over the same period the FTSE All-Share Index rose by 12%. Funds undermanagement at year end, at ‚£4.403 billion, fell by 13% from 31st March 2004dueto pension fund withdrawals.- Core operating profit per head up by 38% and core revenue per head upby 35%.- Net unit trust sales ‚£184 million.Commenting on the results, Nigel Legge, Chief Executive, said:"We have increased our profits, core earnings per share and dividend for thefifth consecutive year. We have controlled our costs and our cost: income ratiohas fallen again; we have increased our cash. The business is in good shape.The reduction in funds under management has been partially offset by the levelof unit trust sales which carry a higher management fee. Whilst our investmentperformance has been more mixed than in previous years, long term performancein all funds remains good.We have a clear strategy to broaden our product range and see excitingopportunities ahead."- ENDS - For further information please contact:Liontrust Asset Management PLC:Nigel Legge, Chief Executive Tel: 020-7412 1700JP Morgan Cazenove Limited:Edward Squire, Corporate Finance Tel: 020-7588 2828Chairman's StatementIt is pleasing to report another set of good results. The business has madehealthy financial progress, although our investment performance has been moremixed than in previous years.Our income is generated in two main ways. We have recurring fees from fundsunder management which make up our core earnings and we have performancerelated fees which are only earned if our investment performance on particularfunds exceeds agreed benchmarks. Performance fee income is variable, so wefocus primarily on 'core' earnings when assessing our progress. Our profitsbefore tax in the year to 31st March 2005are ‚£10.95 million, up 20% from ‚£9.1million a year ago. Our control over costs has led to a core cost: income ratioof 63.4%, down from 64.4% last year. Core earnings per share have increased by4% to 23.64 pence from 22.65 pence last year. The percentage increase in coreearnings per share is less than the increase in core profits due to theunusually low tax charge last year. Your board has decided to recommend afinal core dividend of 8.75 pence per share, payable on 14th July 2005toshareholders on the register at 17th June 2005, the shares going ex-dividend on15th June 2005. With the 2 pence interim dividend already paid, the total coredividend for the full year amounts to 10.75 pence per share, an increase of 43%on last year's 7.5 pence per share. The dividend is covered 2.2 times by coreearnings per share.We earned no performance fees this year whereas last year they contributed ‚£0.34 million, after compensation, to total profits before tax of ‚£9.1 million.Our dividend policy remains to grow our core dividend progressively and, innormal circumstances, pay out any performance related profits as specialdividends. This year, because no performance fees were earned, there is nospecial dividend. Last year the special dividend was 0.75 pence per sharetaking the final total dividend to 8.25 pence per share.On 31st March 2005funds under management stood at ‚£4.403 billion. On 31st March2004funds under management stood at ‚£5.035 billion with ‚£145 million intransition. A net ‚£1.1 billion of pension fund assets were withdrawn in theyear to 31st March 2005, while net unit trust sales were ‚£184 million. Ourfunds under management therefore have decreased by 13% during a year in whichthe FTSE All-Share index rose 12%. Funds under management on 31st May 2005stoodat ‚£4.369 billion. Average funds under management, at ‚£5.023 billion, were 23%higher than the previous year.Over the year we averaged 37 employees and core operating profits per employeewere ‚£272,000 with core revenues per head at ‚£743,000. This level ofproductivity is a credit to our staff's hard work and I thank them allenormously.The loss of over ‚£1 billion of institutional pension fund mandates isdisappointing but reflects the underperformance against their benchmarks of ourGrowth and Large Cap investment processes in the last couple of years. Inaddition, the continued popularity of hedge funds has hurt. We believe asignificant proportion of the assets that have been withdrawn have moved to'absolute return' investment strategies. It is important to remember, however,that both the Growth and Large Cap investment processes have good longer termperformance records and we are confident that in time they will perform wellagain. From a financial perspective the effect of losing the pension fund mandates hasbeen partially offset by the level of unit trust sales on which there is ahigher fixed fee. The overall profitability of the business is a function ofboth margin and funds under management. In addition, the way we are organisedhas contributed to the increase in profitability.In current market conditions we believe it is right to focus on delivering goodperformance from our investment processes. Our other investment products: theIncome Fund and Intellectual Capital Trust (i.e. our value and smallercompanies investment processes respectively) have performed well and weanticipate further growth.During the year we explored the possibility of taking the Company private. Thiswas in the context of our emerging plans to expand into new asset classes withnew investment teams and individuals but in a way that does not put ourexisting business at risk. The objective remains to widen our product range;to help achieve this we will need to identify new employee incentive schemesthat provide long term rewards for long term performance.Our market is highly competitive but we remain confident that the strongbusiness model that has made Liontrust successful since 1995 will continue togive us a competitive advantage and provides an excellent platform from whichto deliver our strategy. We are excited about moving the business forward andsee opportunities to do so. We continue to see a bright future for the companyand all those associated with it.Our Annual General Meeting will be held in the Beaufort Room at The SavoyHotel, Strand, London WC2R 0EU at 11.00am Friday 8th July 2005 and I hope manyof our shareholders will be with us then.Bernard AsherChairman31st May 2005Unaudited Consolidated Profit and Loss Accountfor the Year Ended 31st March 2005 Year ended Year ended 31st March 2005 31st March 2004 Notes ‚£'000 ‚£'000 Turnover (Gross profit) 27,499 24,485 Staff costs (13,272) (11,363) Exceptional staff costs - (189) Total staff costs (13,272) (11,552) Total operating charges (4,172) (4,327) Operating Profit 10,055 8,606 Interest receivable 896 464 Profit on ordinary activities before 10,951 9,070taxation Tax on profit on ordinary activities (3,168) (1,536) Profit on ordinary activities after 7,783 7,534taxation Dividends paid and proposed 3 (3,554) (2,890) Profit for the financial period transferred 4,229 4,644to reserves Pence Pence Basic earnings per share 2 23.64 22.98 Basic earnings per share (adjusted) 2 23.64 23.39 Basic earnings per share (core) 2 23.64 22.65 Diluted earnings per share 2 23.38 22.29 Diluted earnings per share 2 23.38 22.68(adjusted) Diluted earnings per share (core) 2 23.38 21.97 Unaudited Consolidated Balance Sheetas at 31st March 2005 31st March 2005 31st March 2004 (Restated) ‚£'000 ‚£'000 ‚£'000 ‚£'000 Fixed assets Tangible assets 227 299 Current assets Short-term investments 315 197 Debtors 30,847 23,615 Cash at bank and in hand 26,140 15,813 57,302 39,625 Creditors: (amounts falling due within (44,235) (30,529) one year) Net current assets 13,067 9,096 Total assets less current 13,294 9,395liabilities Capital and reserves Called up share capital 352 350 Share premium account 8,878 8,630 Profit and loss account 11,311 7,082 Own shares held by the Liontrust Asset Management Employee Trust (7,247) (6,667) Shareholders' funds (all equity 13,294 9,395interests) Unaudited Consolidated Cash Flow Statementfor the Year Ended 31st March 2005Reconciliation of operating profit to net cash inflow from operating activities Year ended Year ended 31st March 2005 31st March 2004 ‚£'000 ‚£'000 Operating profit 10,055 8,606 Exceptional staff costs - (314) Depreciation charges 105 104 (Increase) in short term (118) (23) investments (Increase)/ decrease in debtors (7,232) 8,391 Increase/ (decrease) in creditors 12,186 (3,493) Net cash inflow from operating activities 14,996 13,271 Cash Flow Statement Net cash inflow from operating activities 14,996 13,271 Returns on investment and servicing of 896 464finance Taxation (2,306) (2,066) Capital expenditure and financial (613) (3,330)investment Equity dividends paid (2,896) (4,294) 10,077 4,045 Financing 250 1,853 Increase in cash 10,327 5,898 Notes to the Financial Statements1. Accounting policies The accounting policies are consistent with those set out in the Group's lastaudited accounts.2. Earnings per share The calculation of basic earnings per share is based on profit after taxationand the weighted average number of Ordinary Shares in issue for each period.The weighted average number of Ordinary Shares for the year was 32,924,922(2004: 32,237,093). Shares held by the Liontrust Asset Management EmployeeTrust are not eligible for dividends and are treated as cancelled for thepurposes of calculating earnings per share.Basic earnings per share (adjusted) are calculated after removing theexceptional items and associated tax credit/ (charge). Basic earnings per share(core) are calculated after removing the exceptional items, the performancerelated fees and costs and related tax charges.Diluted earnings per share are calculated on the same bases as set out above,after adjusting the weighted average number of Ordinary Shares for the effectof options to subscribe for new Ordinary Shares that were in existence at 31stMarch 2005. The adjusted weighted average number of Ordinary Shares socalculated for the year was 33,292,740 (2004: 33,797,605)3. Proposed dividend The Board will propose a final core dividend of 8.75 pence per share, payableon 14th July 2005to all shareholders on the register at 17th June 2005. Year Year Ended Ended 31st March 2005 31st March 2004 Pence ‚£'000 Pence ‚£'000 per per share share Interim dividend paid 2.00 662 1.50 495(core) Final dividend proposed 8.75 2,892 6.00 1,986(core) Total core dividend 10.75 3,554 7.50 2,481 Special dividend proposed - - 0.75 248 Current year dividend 10.75 3,554 8.25 2,729 Final dividend 2003 - - - 161 10.75 3,554 8.25 2,8904. Analysis of profit for the year The table below shows the split in revenues between core and performancerelated earnings: Core Performance Total Core Performance Total earnings related 31st earnings related 31st March March 2004 2005 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Turnover 27,499 - 27,499 23,723 762 24,485 Staff compensation (13,272) - (13,272) (10,944) (419) (11,363) Other operating costs (4,172) - (4,172) (4,327) - (4,327) 10,055 - 10,055 8,452 343 8,795 Exceptional Costs - (189) Operating Profit 10,055 8,606 Interest 896 464 Profit before 10,951 9,070Tax This preliminary announcement constitutes non-statutory accounts under section240 of the Companies Act 1985. The results for the year ended 31st March2005are unaudited. The results for the year to 31st March 2004 have beenextracted from the Group's statutory accounts for that period, which havebeen filed with the Registrar of Companies, the audit report on which was notqualified and did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. ENDLIONTRUST ASSET MANAGEMENT PLCRelated Shares:
Liontrust Asset Management